WASHINGTON--President Obama canceled a Friday trip to Indianapolis as a federal government shutdown looms at midnight Friday because House and Senate leaders remained deadlocked in a budget battle.

Obama met through the day Thursday with House Speaker John Boehner (R-Ohio) and Senate Leader Harry Reid (D-Nv.) as the federal government started to put shutdown plans in place. Obama cancelled his Indianapolis trip on Thursday night, after another meeting with Boehner and Reid did not break the impasse.

Near 9:30 p.m. est, Obama said they made "additional progress this evening. I think the staffs of both the House and the Senate, as well as the White House staff, have been working very hard to try to narrow the differences. We made some progress today. Those differences have been narrowed. And so once again the staff is going to be working tonight around the clock in order to see if we can finally close a deal."

Obama added that "difficult issues" remain on the table. "They're important to both sides. And so I'm not yet prepared to express wild optimism. But I think we are further along today than we were yesterday."

In a joint statement, Boehner and Reid said, "We have narrowed the issues, however, we have not yet reached an agreement. We will continue to work through the night to attempt to resolve our remaining differences."

Obama's complete statement at the click...

THE WHITE HOUSE
Office of the Press Secretary
________________________________________________________________
For Immediate Release April 7, 2011

REMARKS BY THE PRESIDENT
ON BUDGET TALKS

James S. Brady Press Briefing Room

9:33 P.M. EDT

THE PRESIDENT: I just completed another meeting with Speaker Boehner and Leader Reid, and I wanted to report again to the American people that we made some additional progress this evening. I think the staffs of both the House and the Senate, as well as the White House staff, have been working very hard to try to narrow the differences. We made some progress today. Those differences have been narrowed. And so once again the staff is going to be working tonight around the clock in order to see if we can finally close a deal.

But there is still a few issues that are outstanding. They're difficult issues. They're important to both sides. And so I'm not yet prepared to express wild optimism. But I think we are further along today than we were yesterday.

I want to reiterate to people why this is so important. We're now less than 30 hours away from the government shutting down. That means, first of all, 800,000 families -- our neighbors, our friends, who are working hard all across the country in a whole variety of functions -- they suddenly are not allowed to come to work. It also means that they're not getting a paycheck. That obviously has a tremendous impact.

You then have millions more people who end up being impacted because they're not getting the services from the federal government that are important to them. So small businesses aren't seeing their loans processed. Folks who want to get a mortgage through the FHA may not be able to get it, and obviously that's not good as weak as this housing market is. You've got people who are trying to get a passport for a trip that they've been planning for a long time -- they may not be able to do that. So millions more people will be significantly inconvenienced; in some ways, they may end up actually seeing money lost or opportunities lost because of a government shutdown.

And then finally, there's going to be an effect on the economy overall. Earlier today one of our nation's top economists said -- and I'm quoting here -- "The economic damage from a government shutdown would mount very quickly. And the longer it dragged on, the greater the odds of a renewed recession."

We've been working very hard over the last two years to get this economy back on its feet. We've now seen 13 months of job growth; a hundred -- 1.8 million new jobs. We had the best report, jobs report, that we'd seen in a very long time just this past Friday. For us to go backwards because Washington couldn't get its act together is unacceptable.

So, again: 800,000 federal workers and their families impacted; millions of people who are reliant on government services not getting those services -- businesses, farmers, veterans; and finally, overall impact on the economy that could end up severely hampering our recovery and our ability to put people back to work.

That's what's at stake. That's why it's important to the American people. That's why I'm expecting that as a consequence of the good work that's done by our staffs tonight, that we can reach an agreement tomorrow.

But let me just point out one last thing. What I've said to the Speaker and what I've said to Harry Reid is because the machinery of the shutdown is necessarily starting to move, I expect an answer in the morning. And my hope is, is that I'll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted, that a deal has been completed that has very meaningful cuts in a wide variety of categories, that helps us move in the direction of living within our means, but preserves our investments in things like education and innovation, research, that are going to be important for our long-term competitiveness.

That's what I hope to be able to announce tomorrow. There's no certainty yet, but I expect an answer sometime early in the day.